Thursday, 23 April 2015

An argument for “selling” babies

One new and growing area of modern economics is what is commonly referred to as "repugnant markets". This area is most often associated with the work of Nobel prize winner Alvin Roth. Repugnant markets are markets where even when there are willing suppliers and demanders of certain transactions, repugnance to those transactions by others may constrain the market or even prevent the transactions from taking place at all.

The table below, which is from Roth (2007: 39), details a number of markets and their associated transactions which are , or have been, "repugnant".

One market, not mentioned by Roth, which I'm sure many people would find repugnant is the market for babies. Many, but not all. At the blog of The Independent Institute Abigail Hall makes An Argument for “Selling” Babies. Hall starts by making clear what she is, and isn't, talking about,
I am not advocating human trafficking or the idea of kidnapping babies in order to sell them to desperate parents. What I am suggesting is a general deregulation of the market for adoption. Allow birth mothers to enter into contracts with adoptive parents for the rights to parent their child for profit. It’s presently illegal for such transactions to take place. Birth mothers cannot receive payment for agreeing to adopt out their children (though they can have their medical expenses related to the pregnancy covered).
Hall knows that most people would find the idea of "selling babies" repugnant but asks that before we let our moral outrage kill off even discussing the idea we stop and consider the potential for very significant, very positive outcomes for all parties involved. Allowing birth mothers to profit from an adoption transaction fundamentally changes the costs and benefits of a variety of transactions.

Hall then goes on to outline seven likely effects from such a profit-driven market. These seven outcomes are drawn from a 1995 paper, "A Modest Proposal to Deregulate Infant Adoptions" by GMU economist Professor Donald J. Boudreaux,
They include:
  1. The “baby shortage” will diminish or be eliminated as women enter the market to sell the rights to parent their children. The “supply” of infants to be adopted is more likely to meet current demand.
  2. Birth mothers will experience greater wealth as they may profit from the sale of their parental rights.
  3. There will be fewer abortions. As women experiencing unplanned and unwanted pregnancies look at their options, the potential for financial gain means fewer women are likely to terminate. Stated differently, the cost of abortion for women is higher in that they are forgoing the potential income they could receive from an adoption.
  4. Infant health will improve. Since healthy children are likely to command a higher purchase price than ill ones, birth mothers would face strong incentives to receive proper prenatal care and stop behaviors that could damage the fetus.
  5. Child abuse would decline. The current welfare system incentivizes women to keep their children, rather than give them up or abort them. “Marginally wanted” children, as Boudreaux calls them, are more likely to be abused or mistreated. Allowing women to profit from selling their parental rights would mean these children would be more likely to be adopted into loving homes.
  6. Fewer children will be placed in the notoriously dysfunctional and disastrous foster care system (see #5).
  7. The price of fertility treatments will fall. Since adoption and fertility treatments are what economists call “substitute goods,” or goods that can be used for the same purpose, an increase in adoption would decrease the demand for fertility treatments. As demand falls, the price of treatments would fall as well.
Hall ends by explaining that as individuals and groups raise awareness about fertility issues, many people will offer money, thoughts, and prayers to those struggling to have children and expand their families. But
[a]s the above suggests, however, there is something else we can do. That is, we can suggest some serious changes to current adoption laws. Not only would such changes benefit countless couples experiencing fertility issues, but would decrease the number of abortions, increase the income of many women, and benefit children by placing more of them into loving, caring homes.

“I’ll sell you,” though said most often in jest, may be the best words some new babies could hear. They could also be the words allowing millions of couples struggling with infertility to achieve the families they so desperately desire.
  • Roth, Alvin E. (2007). "Repugnance as a Constraint on Markets", Journal of Economic Perspectives, 21(3) Summer: 37-58 .

1 comment:

Miguel Madeira said...

I have some doubts about point 7 - in many products a reduction of the demand can raise (instead of reduce) the price (less economies of scale)